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Commission starts action against Telefónica for breaking E-Plus wholesale promise

Telefónica Wifi sign.jpg

Telefónica is facing investigations by the European Commission over its acquisition of KPN’s E-Plus and by the UK regulator over a network collapse in December.

The Commission is alleging that the German branch of Telefónica failed to offer wholesale 4G services to all interested players at “best prices under benchmark conditions” – breaching the obligation it gave to the European authorities in 2014.

Meanwhile Ofcom, the UK regulator, has announced that it is starting an investigation into the network outage in Telefónica O2 in the UK – when an expired security certificate provided by Ericsson shut the system down.

“This investigation is examining whether O2 has met the expected requirements of network and service providers to … take all appropriate steps to protect, so far as possible, the availability of its public electronic communications network.”

O2 UK and SoftBank’s fixed and mobile networks in Japan were out of operation for hours because of, admitted Ericsson at the time, “an expired certificate in the software versions installed with these customers”. Ericsson told SoftBank that networks in 11 countries were affected by the software that had been installed just nine months earlier.

In Brussels, commissioner Margrethe Vestager said: “Commitments from the parties in merger decisions are crucial to ensure that effective competition is maintained after a merger or takeover, so that there is no harm to consumers. We need full compliance and take very seriously any case where companies may have failed to comply with their commitments, which is why we have sent today’s statement of objections.”

The Commission said that when Telefónica bought E-Plus it promised to continue existing obligations, including “to extend existing wholesale agreements with Telefónica's and E-Plus’s wholesale partners and to offer wholesale 4G services to all interested players at ‘best prices’. In addition, Telefónica committed to improve its wholesale partners’ ability to switch their customers from one MNO to another.”

Telefónica “did not properly implement its obligations under the wholesale 4G access obligation”, said the Commission. “Had Telefónica included such additional agreements, third parties would have benefited from more advantageous 4G wholesale access conditions.”

As a warning of the potential consequences, the Commission appends details of two other cases in the telecoms industry.

Facebook was fined €110 million “for providing incorrect or misleading information” over its WhatsApp acquisition. Altice was fined €124.5 million for acquiring PT Portugal “before notification or approval by the Commission”.

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